More and more data are now available to enable us to analyse the functioning of the French economy during the lockdown. In addition to high-frequency data (such as aggregated bank card transaction amounts) and direct feedback from businesses and professional federations, we now have the first administrative and survey data.

This new, more “conventional” information both confirms and clarifies our original immediate estimates of loss of activity, published on 26 March then on 9 April. As of 23 April 2020, we estimate that the French economy is operating at 35% below “normal”. [1] In the market sector alone, the loss is estimated at –41%, and even as much as –49% if rental payments are excluded, a component that is not very sensitive in the short term to changes in activity. Household consumption looks likely to be 33% lower than normal.

These estimates suggest a very slight upturn in activity in recent weeks, especially in industry and construction, where some businesses that had previously shut down have probably been able to resume part of their activity after putting measures in place to ensure the health and safety of their employees.

However, the situation has changed very little since the start of the lockdown, so there is little likelihood of much change as long as the lockdown continues in its present strict form. Moreover, this estimate of one third of the economy at a standstill (or even as much as a half, in the market sector excluding rents) is globally compatible with recent results from the one-off survey on activity and working conditions for the workforce, conducted by DARES on companies with 10 or more employees: according to this survey, at the end of March, half of employees were working in companies where activity had stopped completely or had decreased by more than half.

The survey is also consistent with the first feedback from administrative sources concerning requests to be placed on short-time working, which now affect more than 10 million employees, or about half of all private sector workers. Additionally, the first data from ACOSS indicate a 22.6% monthly drop for March in the number of declarations of hirings over more than one month.

Results from INSEE’s business tendency surveys for April, published today, also reflect this loss of activity. The business climate has experienced a historic monthly decline, reaching its lowest point since the series came into existence (1980). In some sectors, balances of opinion on expected change in activity in general are approaching, or have reached, their theoretical bottom line (–100); in other words, businesses are unanimously pessimistic: this is the case in particular for accommodation and catering.

Some indicators are less precise than usual. Indeed, statistics too are being tested during this health crisis: survey collection methods, methods for calculating indicators and econometric forecasting methods can all be affected by the consequences of the lockdown. How can we calculate a business climate when, in some sectors – for the time being at least – there is virtually no business?

When we compare this shock to periods of recession in recent decades, it stands out by its suddenness and its magnitude, the direct result of its very unusual nature: the “voluntary” shutdown – for lack of any better way to fight the epidemic – of a large part of the economy. Thus, although the figures from the April surveys may seem spectacular in relation to historical time series, they should not surprise us.

Like a body under anaesthetic, the French economy is performing only its vital functions. Fiscal support measures for companies and households are aimed mainly at encouraging the conditions for recovery – which we know will only be very gradual – then convalescence.

When the lockdown period is over, the loss of national income will have been considerable: the majority will be absorbed by the increase in the public deficit, but a substantial part will nevertheless be borne by companies. [2] Households will also be affected, despite their savings ratio shooting up temporarily as a result of the drop in consumption during lockdown. In addition to the uncertainty over the health scenario, which does not bode well for a rapid economic recovery, there is also uncertainty over the behaviour of households and businesses in this unprecedented situation.

 

¹. We would like to thank all of the partners who continue to support us in carrying out this work, especially the CB Bank Card Group, the Directorate General for Enterprises, SNCF Réseau, RTE, the Strategy, Studies and Statistics Directorate of the CNAM, France Industrie, Rexecode, the services of MEDEF, the Federation of Mechanical Industries. The estimates provided in this document are of course the sole responsibility of INSEE.

². At this stage, our analysis is in agreement qualitatively with that presented recently by the OFCE (Policy Brief n° 66, 20 April 2020). However, we do not believe our forecasts from the agents’ accounts are sufficiently reliable for publication.